Running Numbers (XLK,IYH,GS,FCX,FAS,C,TLT,HYG,AXP,V,RSX)

We’ve got so many trades come due, there’s little time for anything else!

 

Let’s get right to it.

 

First, we’ll take a look at a trade we launched over a year ago, on the 12th of November, 2015, in a letter called The Sachs of a McMorAno.

 

There, we urged you to dump the commodities and move hard and bullish on the financials, using two stock bigshots to play the trade, Freeport McMoRan (NYSE:FCX) and Goldman Sachs (NYSE:GS).

 

The trade recommended you purchase the January 2017 FCX 10 PUT for $3.00 and sell the GS January 2017 GS 150 PUT for $4.95.  Total credit on the trade was a fat $1.95.

 

And now?

 

Wow!

 

First of all, we closed out the FCX PUT on the 10th of December, 2015 for a dandy $4.12 and recommended you “leave your GS PUT to rot.”

 

And so it did.

 

On the third Friday of January, 2017, the GS PUT took the chloroform, expiring worthless, and giving us a very large $6.07 on absolutely no initial investment.  We’d like to thank the academy, the directorate, the foundation and the makers of Turtle Wax for all the support and lustrous satin finish we’ve grown accustomed to.

 

Adjusted for minimum commissions, we walk away with 3947% profit.

 

Next!

 

We’re closing our July 21st initiative, from a letter called Diversions! Distractions! Shell Games and Worry!  You’ll remember that the trade recommended you buy the FAS January 28.50 CALL for $3.50 and sell the C January 45 CALL for $2.88 for a total debit of $0.62 per pair.

 

Then, on December 8th we closed the long FAS option in a letter called Slap Happy Credit Trade for a very sweet $13.05.

 

As for the short side of the trade, the Citigroup CALL expired in-the-money, leaving us short one board lot of C shares, sold at 45.  And with C now trading at $56.20, we’re recommending you buy them back for a loss of $11.20, leaving you with a net profit on the bet of exactly $1.85.

 

That’s 198%.

 

And that’s alright, mama.

Credit Bonanza!

 

Our next big win comes from a letter called When Things Get Twisted Down Below that arrived in your inbox on November 10th.  It called on you to go long the junk bond market and short the safe haven long treasury market.  Specifically, we implored you to buy the HYG January (2018) 83 CALL for $3.40 and sell the TLT January (2018) 125 CALL for $6.40.  Total Credit on the trade was $3.00.

 

And today, the HYG traded for $4.25 and TLT for $3.85.  Sell off the former and buy back the latter and you exit with a grandiose $3.40 on exactly zero spent.

 

That’s a profit of 2167% after accounting for commissions.

 

Keeping with the credit theme, on the 17th of November we offered you a venture using just the iShares 20+ Year Treasury Bond ETF (NYSE:TLT).  The letter was called The Madness of Trade Liquidation and in it we told you to sell the TLT January 128 CALL for $1.11 and buy the TLT January 131 CALL for $0.61.  Total credit per pair traded was $0.50.

 

And that’s exactly where it ended.  On expiry, we pocketed the full measure of the trade, 100%, or fifty bucks per pair traded.

We’re going to report now on our December 1st trade from our letter Financial Sector Mayhem: Buying Panic! Selling Panic! wherein we recommended buying the GS December 31st 220 PUT for $5.30 and selling the GS December 31st 220 CALL for $5.55.  Total credit on the trade was $0.25.

 

The fallout of that trade was already reported in our January 5th missive, called Becoming an Independent Equity Trader.  And we so like the action we took there for a repair of the trade, that in keeping with the same theme we’re now recommending you sell a February 24th 240 call for $1.95.

 

That’ll help further reduce our costs on the initiative.

 

Talk about credit!

 

American Express (NYSE:AXP) and VISA (NYSE:V) were the tradeables in our previously referred to December 8th letter, Slap Happy Credit Trade.  There, we urged you to buy the AXP June 75 PUT for $5.35 and sell the V June 80 PUT for $5.45.  Total credit on the affair was $0.10.

 

And today we’re in a nice profit position.

 

The AXPs go for $3.35 and the V for $2.83.  Shut her down by selling the former and buying back the latter.  Your take is $0.62 on nothing spent.  Again, minimal commissions turn that into a 313% take inside two months.  That’s 3760% annualized for the braggadocious amongst us.

 

Russian Bears?  Not Here…

 

Our last trade on the dock today was opened on the 22nd of December in a holiday themed letter called Goose Feast!  That holly and eggnog number saw you selling lots and lots of PUTs on our Russian friends foes buddies adversaries humans, the first round of which expired two weeks ago, and the latter of which still possess two more weeks of life.

 

You’ll recall the trade’s specifics looked thus – sell ten (10) RSX January 19 PUTs for $0.16 each [expired], and ten (10) RSX February 19 PUTs for $0.31 each.  Total credit on the trade was $4.70.

 

As of today, the ten open February 19 PUTs have a collective value of $0.50, and we say it’s time to buy them back and close this puppy down.

 

When all is said and done, you walk with $4.20 on nothing initially expended, or 2700%.

 

Get thee to a nunnery!

AND NOW FOR TODAY’S TRADE

 

Today we’re opting for a simple long/short affair that cozies up to the weakest sector in the market, the iShares US Healthcare ETF (NYSE:IYH), and takes a slap at one of the strongest, the Technology Select Sector SPDR ETF (NYSE:XLK).

Take a look here –

Since the election, the two have traded at odds with one another.

 

And we say that’s coming to an end.

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Your long XLK option has two months more life than your short IYH!

 

Many happy returns,

 

Matt McAbby

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